Sinopec to pay compensation over pipeline blast

January 13, 2014 - 2:40:46 pm

BEIJING: Chinese state-owned oil giant Sinopec will pay compensation over a November pipeline explosion at its facility in the city of Qingdao that killed dozens of people and caused losses of more than $100 million, it said.

Sinopec is listed in Hong Kong and in a filing to the stock exchange there, said that an official Chinese government investigation determined that "direct economic loss" from the accident totalled 751.72 million yuan or $124.3 million.

The company said it "will pay its share of the compensation", although it did not say how much that would be, or what proportion of it would go directly to victims of the disaster, which killed 62 people and injured 136.

Sinopec said in the statement Sunday that its pledged compensation would come mostly from company insurance policies, adding that its "production, operation and financial position are currently stable".

Citing the probe by China's State Administration of Work Safety, it said the direct cause of the explosion was vapours from oil leaking from an underground pipeline, which were ignited by sparks from a hydraulic hammer.

The investigation also found that Sinopec and its subsidiaries' failure to ensure safe operations contributed to the accident, as did local authorities' failure to properly conduct safety inspections and identify risks, Sinopec's statement said.

The huge blast ripped roads apart, turned cars over and sent thick black smoke billowing over the city.

The explosion happened seven hours after an oil leak was first spotted, and questions remain as to why local residents were not ordered to evacuate in the intervening period.

According to state media 15 people, including unspecified numbers of Sinopec employees and Qingdao city staff, have been detained in connection with the explosion.

Sinopec issued an apology for the incident but denied that it was slow to respond. (AFP)